“Ironwood made substantial progress in the second quarter of 2015, with
continued strong performance for each of our key value drivers –
LINZESS, our innovative pipeline and our strong commercial
capabilities”

“Ironwood made substantial progress in the second quarter of 2015, with
continued strong performance for each of our key value drivers –
LINZESS, our innovative pipeline and our strong commercial
capabilities,” said Peter Hecht, chief executive officer of Ironwood.
“LINZESS is the branded market leader in its category, with continued
double-digit prescription growth and brand profitability in the U.S. We
reported multiple positive data readouts from our pipeline including
Phase I data from IW-1973, which provides the first evidence of the
potential for our sGC stimulators platform to deliver blockbuster
products targeting severe cardiovascular and fibrotic diseases with
large unmet needs. We are committed to our goal of building a leading
pharmaceutical company grounded in GI and guanylate cyclase innovation
that delivers differentiated medicines to our patients and creates value
for our shareholders, and we are very encouraged by our recent progress.”

Second Quarter 2015 and Recent Highlights

LINZESS® (linaclotide)

LINZESS U.S. net sales, as provided by Allergan plc, were $112.1
million in the second quarter of 2015, an approximately 79% increase
compared to the second quarter of 2014.

More than 510,000 total LINZESS prescriptions were filled in the
second quarter of 2015, an approximately 56% increase compared to the
second quarter of 2014, and nearly three million LINZESS prescriptions
have been filled since the product’s launch in December 2012,
according to IMS Health.

Net profit for the LINZESS brand collaboration in the U.S., including
commercial costs and expenses and research and development (R&D)
expenses, was $15.0 million in the second quarter of 2015. LINZESS
U.S. net profit is shared equally with Allergan.

Approximately 140,000 healthcare practitioners have prescribed LINZESS
to more than 760,000 unique patients since the product’s launch,
according to IMS Health.

More than 70% of people with commercial insurance or Medicare Part D
plans had unrestricted access to LINZESS as of May 2015. Additionally,
as of June 2015, more than 75% of people with commercial insurance had
access to LINZESS for a co-pay of $30 or less through formulary
coverage or the LINZESS Instant Savings Program.

Research & Development

Ironwood continues to advance its innovative pipeline. The company now
expects up to 12 ongoing clinical studies in 2015, including four
Ironwood studies and eight with its partners. In addition, Ironwood
expects five clinical data readouts in 2015, including the already
reported positive top-line data from the IW-3718 Phase IIa study, the
linaclotide Phase III trial for China, and the IW-1973 Phase Ia study.

Ironwood and Allergan continue to evaluate opportunities to strengthen
the clinical utility of linaclotide in its indicated patient
population, as well as to develop and seek approval of linaclotide in
additional indications, patient populations and formulations.
Development highlights during the second quarter and recent period
include:

Completed enrollment in the Phase III clinical trial assessing the
efficacy and safety of a once-daily 72 mcg dose of linaclotide in
adult patients with chronic idiopathic constipation (CIC). Data
from this trial are expected in the fourth quarter of 2015 and a
supplemental new drug application is expected to be submitted to
the U.S. Food and Drug Administration (FDA) in the first half of
2016. If approved, the 72 mcg dose should accelerate the expansion
of LINZESS use within adult CIC patients by providing physicians
an additional dosing option for this large and diverse population.

Completed enrollment in the Phase II clinical study evaluating
linaclotide for the treatment of adults suffering from
opioid-induced constipation. Data from this study are expected in
the fourth quarter of 2015.

Finalizing preparations for a Phase IIb clinical study to evaluate
two linaclotide colonic release formulations in adult patients
with irritable bowel syndrome with constipation (IBS-C). The Phase
IIb study is expected to initiate in the fourth quarter of 2015
with data anticipated in the second half of 2016.

Worked with FDA to advance plans to evaluate linaclotide in the
pediatric population. Two Phase II studies are expected to
initiate in the fourth quarter of 2015, one in IBS-C patients aged
7 to 17 years old and the other in patients with functional
constipation aged 6 to 17 years old.

Ironwood continues to advance its pipeline of gastrointestinal (GI)
product candidates and its soluble guanylate cyclase (sGC) program.
Development highlights during the second quarter and recent period
include:

Advanced IW-1973 and IW-1701, the first two candidates from the
sGC stimulator platform. sGC is a key regulator of blood flow,
fibrosis and inflammation in nearly every tissue throughout the
human body. Ironwood is developing an innovative and proprietary
chemical series of pharmacologically distinct sGC stimulators
targeting severe cardiovascular and fibrotic diseases. Ironwood
reported positive top-line data from the Phase Ia clinical study
of IW-1973, Ironwood’s first sGC stimulator. In the study, IW-1973
demonstrated cardiovascular pharmacodynamic effects, extensive
tissue distribution, proof of mechanism for sGC stimulation, and a
dose range that was well tolerated in healthy volunteers. No
serious adverse events were reported. Ironwood intends to initiate
a Phase Ib multiple ascending dose study of IW-1973 in the fourth
quarter of 2015. The company expects to initiate a Phase I
clinical study with its second sGC stimulator, IW-1701, in the
fourth quarter of 2015.

Finalizing preparations for the IW-3718 dose-ranging Phase IIb
study for the potential treatment of refractory GERD, which is
expected to initiate in early 2016.

Continued enrollment in the Phase IIa clinical study evaluating
the ability of IW-9179 to provide relief of diabetic gastroparesis
symptoms. IW-9179 is a guanylate cyclase-C (GC-C) agonist designed
to target the upper GI tract. Data from this study are expected in
the first half of 2016.

Global Partnerships for Linaclotide

Ironwood and AstraZeneca AB reported positive top-line data from a
Phase III clinical trial of linaclotide in adults with IBS-C for
China. In this trial, linaclotide met all primary and secondary
endpoints with statistical significance, including multiple abdominal
and constipation symptoms. The most common adverse event reported in
linaclotide-treated patients was diarrhea. The companies intend to
file in early 2016 for China Food and Drug Administration approval to
market linaclotide.

Astellas Pharma Inc. completed enrollment in its Phase III clinical
trial of linaclotide in adult patients with IBS-C for Japan, and
expects to complete the trial in 2016. In addition, Astellas also
continues to enroll patients in its Phase II clinical study of
linaclotide in adult patients with chronic constipation for Japan, and
expects to complete the Phase II study in 2016.

Almirall, S.A. continues to commercialize CONSTELLA® (linaclotide) in
Europe, where it is approved for adult patients with moderate to
severe IBS-C and is available in 12 European countries, including the
United Kingdom, Italy and Spain.

Commercial Capabilities

Ironwood and Exact Sciences Corp. are co-promoting Exact Sciences'
Cologuard®, the first and only FDA-approved noninvasive
stool DNA screening test for colorectal cancer. Ironwood's clinical
sales specialists began promoting Cologuard in April 2015. As of
mid-July 2015, approximately 3,000 healthcare practitioners on whom
the Ironwood clinical sales specialists have called have ordered a
Cologuard test kit, as provided by Exact Sciences.

Ironwood and Allergan entered an agreement for the U.S. co-promotion
of VIBERZI™ (eluxadoline), Allergan’s new treatment for adults
suffering from irritable bowel syndrome with diarrhea (IBS-D). Under
the terms of the agreement, Ironwood’s clinical sales specialists will
detail VIBERZI to the approximately 25,000 health care practitioners
to whom they currently detail LINZESS and Cologuard®.
LINZESS will remain the first-position product for the Ironwood sales
team. Ironwood’s promotional efforts will be compensated based on the
volume of calls delivered by Ironwood’s sales force, as well as agreed
upon performance metrics. There will be no incremental investment on
the part of Ironwood. Allergan will be responsible for all other costs
relating to the commercialization of VIBERZI.

Corporate and Financials

Collaborative Arrangements Revenue. Collaborative arrangements
revenue was approximately $27.7 million in the second quarter of 2015
compared to approximately $6.8 million in the second quarter of 2014.
Revenue consisted of approximately $24.3 million in revenue associated
with Ironwood’s share of the net profits and losses from the sales of
LINZESS in the U.S., as well as approximately $3.4 million in
amortization of deferred revenue associated with consideration
received from Ironwood’s collaboration with Astellas, revenue
recognized in connection with the collaboration with AstraZeneca,
royalty payments based on sales of linaclotide in territories outside
of the U.S., and revenues associated with Ironwood’s co-promotion
agreement with Exact Sciences Corp.

Cost of revenue. Cost of revenue is recognized upon shipment of
linaclotide API to certain licensing partners outside of the U.S.
Allergan records costs associated with linaclotide API in the
U.S. Cost of revenue was approximately $8.2 million in the second
quarter of 2015 as compared to $10.5 million in the second quarter of
2014. Cost of revenue in the second quarter of 2015 was primarily due
to a write-down of existing linaclotide API as well as a charge for
excess purchase commitments, primarily attributable to a lengthened
approval timeline in China as a result of recent regulatory changes
made by the China Food and Drug Administration and lower projected
sales in the European market.

Operating Expenses. Operating expenses were approximately $61.6
million in the second quarter of 2015 as compared to approximately
$51.4 million in the second quarter of 2014. Operating expense
run-rate remains in-line with Ironwood’s full year 2015 guidance.
Operating expenses in the second quarter of 2015 consisted of
approximately $28.6 million in R&D expenses, and approximately $33.0
million in selling, general and administrative (SG&A) expenses.
Non-cash share-based compensation expenses recorded in R&D and SG&A
expenses in the second quarter of 2015 were approximately $2.7 million
and $4.2 million, respectively.

Interest Expense. Interest expense was approximately $5.9
million in the second quarter of 2015, as compared to approximately
$5.3 million in the second quarter of 2014, in connection with the
$175 million debt financing executed in January 2013 and the
approximately $336 million convertible debt financing executed in June
2015.

Net Loss. Net loss was approximately $48.0 million, or $0.34
per share, in the second quarter of 2015, as compared to approximately
$60.4 million, or $0.44 per share, in the second quarter of 2014.

Cash Position. Ironwood ended the second quarter of 2015 with
approximately $493 million of cash, cash equivalents and
available-for-sale securities. Ironwood used approximately $26 million
of cash for operations during the second quarter of 2015, as compared
to approximately $36 million in the second quarter of 2014.

Convertible Debt Offering. In June 2015, Ironwood issued
approximately $335.7 million in aggregate principal of 2.25%
Convertible Senior Notes. These notes include a seven-year maturity
and an initial equivalent conversion price of $16.58 per share. As
part of the offering, Ironwood also entered into certain derivative
arrangements that effectively increased the equivalent conversion
price to $21.50 per share. Aggregate net proceeds, after the purchase
of the convertible note hedge, underwriting discounts and other
offering expenses, were approximately $303.0 million.

2015 Financial Guidance.

Ironwood continues to expect its 2015 total operating expenses to
be in the range of $220 million to $250 million, which includes
$105 million to $120 million in R&D expenses and $115 million to
$130 million in SG&A expenses.

Ironwood continues to expect combined Allergan and Ironwood total
2015 marketing and sales expenses for LINZESS to be in the range
of $230 million to $260 million.

Conference Call Information

Ironwood will host a conference call and webcast at 4:30 p.m. Eastern
Time, on Wednesday, August 5, to discuss its second quarter 2015 and
recent business activities. Individuals interested in participating in
the call should dial (877) 643-7155(U.S. and Canada) or (914)
495-8552 (international) using conference ID number 83522769. To access
the webcast, please visit the Investors section of Ironwood’s website at www.ironwoodpharma.com
at least 15 minutes prior to the start of the call to ensure adequate
time for any software downloads that may be required. The call will be
available for replay via telephone starting at approximately 7:30 p.m.
Eastern Time, on August 5, running through 11:59 p.m. Eastern Time on
August 12, 2015. To listen to the replay, dial (855) 859-2056 (U.S. and
Canada) or (404) 537-3406 (international) using conference ID number
83522769. The archived webcast will be available on Ironwood’s website
for 14 days beginning approximately one hour after the call has
completed.

About LINZESS (linaclotide)

LINZESS® is the first and only guanylate cyclase-C (GC-C) agonist
approved by the FDA and is indicated for the treatment of both irritable
bowel syndrome with constipation (IBS-C) and chronic idiopathic
constipation (CIC) in adults. LINZESS is a once-daily capsule that helps
relieve the abdominal pain and constipation associated with IBS-C, as
well as the constipation, infrequent stools, hard stools and incomplete
evacuation associated with CIC. The recommended dose is 290 mcg for
IBS-C patients and 145 mcg for CIC patients. LINZESS should be taken at
least 30 minutes before the first meal of the day.

LINZESS is thought to work in two ways based on nonclinical studies.
LINZESS binds to the GC-C receptor locally, within the intestinal
epithelium. Activation of GC-C results in increased intestinal fluid
secretion and accelerated transit and a decrease in the activity of
pain-sensing nerves in the intestine. The clinical relevance of the
effect on pain fibers, which is based on nonclinical studies, has not
been established.

In placebo-controlled Phase III clinical trials of more than 2,800
adults, LINZESS was shown to reduce abdominal pain in IBS-C patients and
increase bowel movement frequency in both IBS-C patients and CIC
patients. Improvement in abdominal pain and constipation occurred in the
first week of treatment and was maintained throughout the 12-week
treatment period. Maximum effect on abdominal pain was seen at weeks 6-9
and maximum effect on constipation occurred during the first week. When
a subset of LINZESS-treated patients in the trials were switched to
placebo, they reported their symptoms returned toward pretreatment
levels within one week, while placebo-treated patients switched to
LINZESS reported symptom improvements. LINZESS is contraindicated in
pediatric patients under 6 years of age. The use of LINZESS in pediatric
patients 6 through 17 years of age should be avoided. In nonclinical
studies, administration of a single, clinically relevant adult oral dose
of linaclotide caused deaths due to dehydration in young juvenile mice.
The safety and efficacy of LINZESS in pediatric patients under 18 years
of age have not been established. In adults with IBS-C or CIC treated
with LINZESS, the most commonly reported adverse event was diarrhea.

Ironwood and Allergan plc are co-promoting LINZESS in the United States.
Linaclotide is marketed by Almirall, S.A. for the treatment of adults
with moderate to severe IBS-C in Europe under the brand name CONSTELLA®.
Ironwood also has partnered with Astellas Pharma Inc. for development
and commercialization of linaclotide in Japan and with AstraZeneca AB
for development and commercialization in China.

About CONSTELLA (linaclotide)

Linaclotide is a guanylate cyclase-C receptor agonist (GCCA) with
visceral analgesic and secretory activities. Linaclotide is a 14-amino
acid synthetic peptide structurally related to the endogenous guanylin
peptide family. Both linaclotide and its active metabolite bind to the
guanylate cyclase-C receptor, on the luminal surface of the intestinal
epithelium. Through its action at GC-C, linaclotide has been shown to
reduce visceral pain and increase GI transit in animal models and
increase colonic transit in humans. Activation of GC-C results in an
increase in concentrations of cyclic guanosine monophosphate (cGMP),
both extracellularly and intracellularly. Extracellular cGMP decreases
pain-fiber activity, resulting in reduced visceral pain in animal
models. Intracellular cGMP causes secretion of chloride and bicarbonate
into the intestinal lumen, through activation of the cystic fibrosis
transmembrane conductance regulator (CFTR), which results in increased
intestinal fluid and accelerated transit.

Linaclotide was discovered by scientists at Ironwood and is marketed by
Almirall, S.A. for the treatment of adults with moderate to severe IBS-C
in Europe under the brand name CONSTELLA, through a license agreement
between the two companies.

About Ironwood Pharmaceuticals

Ironwood Pharmaceuticals (NASDAQ: IRWD) is focused on creating medicines
that make a difference for patients, building value to earn the
continued support of our fellow shareholders, and empowering our team to
passionately pursue excellence. We discovered, developed and are
commercializing linaclotide, which is approved in the United States and
a number of other countries. Our pipeline priorities include exploring
further opportunities for linaclotide, as well as leveraging our
therapeutic expertise in gastrointestinal disorders and our
pharmacologic expertise in guanylate cyclases to address patient needs
across the upper and lower gastrointestinal tract. Ironwood was founded
in 1998 and is headquartered in Cambridge, Mass. Connect with us at www.ironwoodpharma.com
or on Twitter at www.twitter.com/ironwoodpharma;
information that may be important to investors will be routinely posted
in both these locations.

LINZESS® and CONSTELLA® are trademarks owned by Ironwood
Pharmaceuticals, Inc. Any other trademarks referred to in this press
release are the property of their respective owners. All rights reserved.

Important Safety Information

WARNING: PEDIATRIC RISK

LINZESS is contraindicated in pediatric patients under 6 years
of age. In nonclinical studies, administration of a single,
clinically relevant adult oral dose of linaclotide caused deaths
due to dehydration in young juvenile mice. Use of LINZESS should
be avoided in pediatric patients 6 through 17 years of age. The
safety and efficacy of LINZESS has not been established in
pediatric patients under 18 years of age.

Contraindications

LINZESS is contraindicated in pediatric patients under 6 years of age.

LINZESS is contraindicated in patients with known or suspected
mechanical gastrointestinal obstruction.

Warnings and Precautions

Pediatric Risk

LINZESS is contraindicated in children under 6 years of age. The
safety and effectiveness of LINZESS in pediatric patients under 18
years of age have not been established. In neonatal mice, increased
fluid secretion as a consequence of GC-C agonism resulted in mortality
within the first 24 hours due to dehydration. Due to increased
intestinal expression of GC-C, children under 6 years of age may be
more likely than older children and adults to develop significant
diarrhea and its potentially serious consequences.

Use of LINZESS should be avoided in pediatric patients 6 through 17
years of age. Although there were no deaths in older juvenile mice,
given the deaths in young juvenile mice and the lack of clinical
safety and efficacy data in pediatric patients, use of LINZESS should
be avoided in pediatric patients 6 through 17 years of age.

Diarrhea

Diarrhea was the most common adverse reaction of LINZESS-treated
patients in the pooled IBS-C and CIC double-blind placebo-controlled
trials. Severe diarrhea was reported in 2% of LINZESS-treated
patients. The incidence of diarrhea was similar in the IBS-C and CIC
populations.

Patients should be instructed to stop LINZESS if severe diarrhea
occurs and to contact their healthcare provider. The healthcare
provider should consider dose suspension and rehydration.

This press release contains forward-looking statements. Investors are
cautioned not to place undue reliance on these forward-looking
statements, including, but not limited to, statements about development,
launch and commercialization plans for linaclotide and our product
candidates; commercial efforts for linaclotide and the other products
that we promote and the drivers, timing, impact and results thereof;
market size, growth and opportunity, and potential demand for
linaclotide, our product candidates and the other products that we
promote, as well as their potential impact on applicable markets; the
potential indications for, and benefits of, linaclotide and our product
candidates; the anticipated timing of pre-clinical, clinical and
regulatory developments; the design, timing and results of clinical and
pre-clinical studies; the timing of filings with regulatory authorities;
expected periods of patent exclusivity; the strength of the intellectual
property protection for our product and product candidates; potential
business development activity and the timing and impact thereof;
profitability of the U.S. LINZESS brand collaboration with Allergan plc;
and our company's financial performance and results, and guidance and
expectations related thereto, including our projected 2015 operating
expenses, revenue growth, operating leverage, and 2015 marketing and
sales expense for LINZESS. Each forward‐looking statement is subject to
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in such statement. Applicable
risks and uncertainties include, but are not limited to, those related
to pre-clinical and clinical development, manufacturing, and formulation
development; the risk that findings from our completed nonclinical and
clinical studies may not be replicated in later studies; decisions made
by U.S. regulatory authorities, the U.S. Patent and Trademark Office and
their foreign counterparts; the risk that we may never get sufficient
patent protection for linaclotide and our product candidates;
intellectual property rights of competitors or potential competitors;
efficacy, safety and tolerability of linaclotide and our product
candidates; competition in disease states; the commercial potential of
linaclotide, our product candidates and the other products that we
promote; the risk that our planned investments do not have the
anticipated effect on our company revenues, linaclotide or our product
candidates; the risk that we are unable to identify and execute on
business development opportunities in a cost-effective and timely manner
or that such opportunities do not have the impact expected; the risk
that we are unable to manage our operating expenses over the year due to
foreseeable or unforeseeable events or occurrences; and the risk that we
and Allergan are unable to commercialize LINZESS within the guided range
of expenses. Applicable risks also include those that are listed under
the heading "Risk Factors" and elsewhere in Ironwood's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2015, in addition to the
risk factors that are listed from time to time in Ironwood's Annual
Reports on Form 10‐K, Quarterly Reports on Form 10‐Q and any other
subsequent SEC filings. Ironwood undertakes no obligation to update
these forward-looking statements to reflect events or circumstances
occurring after this press release. Except as otherwise noted, these
forward-looking statements speak only as of the date of this press
release. All forward‐looking statements are qualified in their entirety
by this cautionary statement.Further, Ironwood considers the net
profit for the U.S. LINZESS brand collaboration with Allergan in
assessing the product’s performance and calculates it based on inputs
from both Ironwood and Allergan. This figure should not be considered a
substitute for Ironwood’s GAAP financial results. An explanation of our
calculation of this figure is provided in the U.S. LINZESS Brand
Collaboration table and related footnotes accompanying this press
release.

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)

June 30,2015

December 31,2014

Assets

Cash, cash equivalents and available-for-sale securities

$

493,315

$

248,334

Accounts receivable, net

27,049

25,839

Inventory

-

4,954

Prepaid expenses and other current assets

6,595

9,180

Total current assets

526,959

288,307

Property and equipment, net

25,017

29,826

Convertible note hedges

90,314

-

Other assets

11,651

11,189

Total assets

$

653,941

$

329,322

Liabilities and Stockholders’ Equity

Accounts payable and accrued expenses

$

31,125

$

35,948

Current portion of capital lease obligations

1,203

1,152

Current portion of deferred rent

5,009

4,992

Current portion of deferred revenue

7,191

7,191

Current portion of PhaRMA notes payable

17,571

11,258

Total current liabilities

62,099

60,541

Capital lease obligations

1,959

2,571

Deferred rent

8,821

10,522

Deferred revenue

5,393

8,989

Other liabilities

3,845

-

Note hedge warrants

69,456

-

Convertible notes

214,292

-

PhaRMA notes payable

147,793

158,147

Total stockholders’ equity

140,283

88,552

Total liabilities and stockholders’ equity

$

653,941

$

329,322

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)

Three Months EndedJune 30,

Six Months EndedJune 30,

2015

2014

2015

2014

Revenue

$

27,744

$

6,840

$

56,676

$

21,445

Cost and expenses:

Cost of revenue

8,150

10,518

8,162

12,442

Research and development (1)

28,648

22,142

55,289

49,286

Selling, general and administrative (1)

32,955

29,299

63,301

59,223

Total cost and expenses

69,753

61,959

126,752

120,951

Loss from operations

(42,009

)

(55,119

)

(70,076

)

(99,506

)

Other expense, net

(6,011

)

(5,238

)

(11,166

)

(10,477

)

Net loss

$

(48,020

)

$

(60,357

)

$

(81,242

)

$

(109,983

)

Net loss per share—basic and diluted

$

(0.34

)

$

(0.44

)

$

(0.57

)

$

(0.82

)

Weighted average number of common shares used in net loss per share
—basic and diluted

142,098

138,315

141,690

134,053

(1) Non-cash compensation expenses reflected in the condensed
consolidated statements of operations are as follows:

Research and development

$

2,691

$

2,271

$

4,745

$

4,961

Selling, general and administrative

$

4,212

$

3,741

$

7,584

$

7,125

U.S. LINZESS Brand Collaboration1

Revenue/Expense Calculation

(in thousands)

(unaudited)

Three Months EndedJune 30,

Six Months EndedJune 30,

2015

2014

2015

2014

LINZESS U.S. net sales

$

112,062

$

62,746

$

207,551

$

123,558

Commercial costs and expenses2

77,840

79,424

135,991

139,340

Net profit (loss) on sales of LINZESS

$

34,222

$

(16,678

)

$

71,560

$

(15,782

)

Ironwood’s share of net profit (loss)

$

17,111

$

(8,339

)

$

35,780

$

(7,891

)

Ironwood’s selling, general and administrative expenses3

$

8,314

$

7,806

$

16,002

$

15,805

Profit share adjustment4

$

(1,150

)

$

2,311

$

(2,370

)

$

2,311

Ironwood’s collaborative arrangement revenue

$

24,275

$

1,778

$

49,412

$

10,225

1 Ironwood collaborates with Allergan on the development and
commercialization of linaclotide in North America. Under the terms of
the collaboration agreement, Ironwood receives 50% of the net profits
and bears 50% of the net losses from the commercial sale of LINZESS in
the U.S. The purpose of this table is to present calculations of
Ironwood’s share of net profit (loss) generated from the sales of
LINZESS in the U.S. and Ironwood’s collaboration revenue/expense;
however, the table does not present the research and development
expenses related to LINZESS in the U.S. that are shared equally between
the parties under the collaboration agreement. For the three months
ended June 30, 2015, net profit for the U.S. LINZESS brand collaboration
with Allergan was $15.0 million, calculated by subtracting $77.8 million
in commercial costs and expenses and $19.3 million in research and
development expenses, from LINZESS U.S. net sales of $112.1 million.2
Includes cost of goods sold incurred by Allergan as well as selling,
general and administrative expenses incurred by Allergan and Ironwood
that are attributable to the cost-sharing arrangement between the
parties.3 Includes Ironwood’s selling, general and
administrative expenses attributable to the cost-sharing arrangement
with Allergan.4 Ironwood or Allergan may incur
additional expenses related to certain contractual obligations,
resulting in an adjustment to the company’s share of the net profits as
stipulated by the collaboration agreement.